topic Roth IRA phase out in Retirement tax questions

Roth IRA phase out

JonS2 — Sat, 30 Jan 2021 11:49:54 GMT

Hello,

Working on my 2020 taxes, married filing jointly. Our combined AGI on the 1040 on turbotax says $210k. I assume MAGI is higher but TurboTax does not show you the MAGI calculation. When I follow the IRA questions in TurboTax and say that I have contributed $6k for both my wife and myself, TurboTax does not tell me I have exceeded what I am allowed to contribute. I was planning to do a back door Roth but TurboTax seems to be allowing me to make full contributions. What am I doing wrong? Shouldn't TurboTax catch this?

Re: Roth IRA phase out

dmertz — Sat, 30 Jan 2021 14:58:07 GMT

It's probably more common that your MAGI for the purpose of a Roth IRA contribution is less than your AGI because the calculation of this MAGI involves subtracting from AGI the amount of any Roth conversions from a traditional IRA or rollovers from a traditional account in a qualified retirement plan to a Roth IRA. If you've moved at least $16,000 taxably to a Roth IRA in either of these ways, that would bring your MAGI below the $196,000 for 2020 where the phase-out range begins.

If your MAGI ends up being above $196,000 and you enter a Roth IRA contribution of the maximum permissible for your or your spouse's age, TurboTax will tell you the excess contribution.

You can see your MAGI and the maximum Roth IRA the calculation on TurboTax's Roth IRA Contribution Limit Worksheet ("Roth IRA" in the forms list).

Re: Roth IRA phase out

JonS2 — Sat, 30 Jan 2021 14:28:55 GMT

Thank you. That is exactly it. After reading your reply I looked at IRS publication 590-A and found worksheet 2-1. We converted a traditional IRA to Roth this year and that value entered into line 2 brought us below $196k.